No one is safe from unemployment these days. Whether it’s about dismissal, restructuring, a voluntary change of job or a necessary termination due to a move, everyone can find themselves unemployed at some point. How can you continue to pay your loan even though you have no fixed income due to unemployment? What does the insurance company pay and under what conditions? We have the explanations.
What income do you get from unemployment?
Persons who have become unemployed are entitled to an insured income, which is paid out by the unemployment insurance in the form of daily allowances. The amount received can vary from one month to another, but is basically 70% of the salary received before unemployment. This percentage is increased to 80% for persons who have at least one child to look after. In any case, a period of no employment means a 20% -30% decrease in financial capacity, which can make repayment of a loan difficult.
Take out installment insurance for credit
When a personal loan is taken out, there is a voluntary option to take out insurance in the event of unemployment or, more generally, any loss of earnings . One speaks of PPI (for Payment Protection Insurance ). This product is optional for borrowers and incurs certain costs, but also brings greater security in the event of unemployment. With this option:
- The credit rates are covered by the insurance from the 61st day of unemployment
- A maximum of 9 monthly installments per unemployed period are taken over for a total of USD 65,000
- The following claims are covered: unemployment, illness, accident, loss of earnings
Can you only take out such insurance when you sign the contract?
No, the installment insurance can be taken out at any time during the repayment period. The only condition is that you have not already lost your job upon graduation. There is also a waiting period that must elapse between the signing and the entry into force of the cover. It is therefore not possible to get insurance “immediately before” unemployment.
No insurance and unemployed – how do I repay the loan?
You should contact the bank or credit agency responsible for your dossier immediately. Your credit partner can see whether a solution can be found, for example, deferring one or two monthly installments. A transparent approach enables solutions to be found and prevents dunning fees and debt enforcement.